Finance

Will the Saint get those Pokémon cards in our shoe in time?

Sinterklaas and Piet are back in the Netherlands. During dinner I asked my two boys aged 6 (still believes) and 9 years old (don’t believe anymore, but plays along nicely) what they want from Sinterklaas this year. They didn’t have to think twice about that: Pokémon cards! The craze from Japan is also very popular in the Netherlands among primary school youth and nostalgic adults.

One problem: the cards are no longer available in toy stores due to the exploded global demand and disrupted logistics chains. And orders via online stores can sometimes take up to six weeks. Not a nice prospect for our saintly man.

How did we actually get into these logistical problems? The main cause is the large-scale cancellation of freight shipments during the corona crisis, which means that containers are in the ‘wrong’ places worldwide. Due to these logistical disruptions, the average transport time for the shipment of goods by sea has increased by 43 percent in the past year. There are even rumors that the problems could persist for another two years.

Shipping companies are also benefiting greatly from the current ‘containergeddon’ (see chart below). There are indications that shipping companies will achieve an operating profit in 2021 that will be higher than the past two decades combined. In addition to the problems of shipping goods by sea, there is also a huge shortage of drivers in the United States and Europe, which creates even more headaches in the logistics chain.

The consequences? Empty shelves and ultimately higher prices for consumers. RaboResearch colleagues Xinnan Li and Matteo Iagatti conclude, for example, that although the global food trade has suffered relatively little from the logistical problems, there are major risks lurking beneath the surface.

Shipping container costs have exploded after the corona crisis

Cost of a shipping container (40 feet) in USD

Asia currently has 1.6 million redundant refrigerated containers, while South America has a million too few. If this is not resolved, it could cause delivery problems from South America, which means that our bananas and avocados, for example, could become considerably more expensive. This is how the worldwide logistical problems literally end up on our plate.

Back to dinner and the Pokémon cards. Out of curiosity, I immediately decided to ask how Sint and Piet can ensure that those fervently desired Pokémon cards end up in their shoe. My eldest son had an idea: most Pokémon cards come from England (because they often contain English texts, so was his reasoning), so they probably have a few left that Santa can pick up with his boat.

My youngest son thought that was almost as bad as stealing, so the Petes had to copy the cards themselves and preferably so well that they cannot be distinguished from real ones. But if it wasn’t, he didn’t mind either.

I think there is a nice lesson in these solutions: producing closer to home (reshoring). In the past, we’ve designed our value chains so hyper-efficiently, just to chase the lowest price, that we’ve forgotten how vulnerable they have become in the event of unforeseen circumstances, such as a pandemic. And more importantly, we have conveniently ignored the massive robbery we have committed on natural resources, the environment and the climate.

A step in the right direction is that agreements were made at the climate summit in Glasgow about emission-neutral shipping routes. Legislation is also ready to bring international shipping under the European Emissions Trading System (ETS). And hopefully one day we will have a new cabinet that does want to seriously tackle the climate problem.

If that is the case, then all Dutch children may receive the most beautiful gift during these holidays, without even knowing it: the prospect of seeing their own children grow up in a Netherlands that is not literally half under water. And even the rarest Mega-Charizard VMAX GX Pokémon card can’t compete with that.

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